South Africa
Corporate Guide

Is there a requirement to declare beneficial ownership in South Africa?

Yes, in certain circumstances. 

A beneficial owner is defined as an individual (i.e. a natural person) who, directly or indirectly, ultimately owns or exercises effective control of a company. While the Act gives a non-exhaustive list of examples of people who would qualify as beneficial owners, the terms "own" and "control" are unfortunately not defined. As such, one would have to rely on the ordinary meaning of these terms, namely the ability to direct the policy of the company through majority shareholding or other means to control the composition of the board. According to the Act, by way of example, ownership or control in respect of a company can be achieved through: 

• The holding of beneficial interests in the securities of that company (see below for the distinction between a beneficial interest and a beneficial owner);
• The exercise of, or control of the exercise of the voting rights associated with securities of that company; 
• The exercise of, or control of the exercise of the right to appoint or remove members of the board of directors of that company; 
• The holding of beneficial interests in the securities, or the ability to exercise control, including through a chain of ownership or control, of a holding company of that company; 
• The ability to exercise control, including through a chain of ownership or control, of a juristic person other than a holding company of that company; a body of persons corporate or unincorporated; a person acting on behalf of a partnership; or a person acting in pursuance of the provisions of a trust agreement; or
• The ability to otherwise materially influence the management of that company.

The duty to disclose beneficial ownership depends on whether the company is an "affected company" or not. 

An affected company is a regulated company, as defined in the Act, or a subsidiary of a regulated company. A regulated company is a public company; a state-owned company; or a private company of which more than 10% of the shares have transferred amongst unrelated persons in the past 24 months or whose MOI opts into the Takeover Regulations. 

A company that is not an affected company has a duty to keep an updated record of its beneficial owners in its securities register and submit that securities register, together with certain prescribed information in relation to each beneficial owner, to the CIPC. 

An affected company only has to file its securities register (which does not have to include beneficial owners) and register of persons holding a beneficial interest of 5% or more in the company. The concept of beneficial interest must be distinguished from beneficial ownership. Holding a beneficial interest in the securities of a company entails a person having the right or entitlement to: (i) receive distributions in respect of the securities; (ii) exercise or cause to be exercised any or all of the rights attaching to the securities (e.g. voting rights), or (iii) dispose of or direct the disposal of those securities. A common example of this is the nominee relationship, i.e. where the registered shareholder is merely a nominee or agent of the beneficial shareholder.